Rashid Boatwalla’s Post

🚨 Supreme Court Clarifies Shareholder Approval in Share Listing Disputes 🚨 The recent case Jyoti Limited vs. BSE Limited & Anr. (C.A. No. 4707/2022) offers a significant ruling on the interplay between Section 62(1)(c) of the Companies Act, 2013 and SEBI Listing Regulations, 2015. Key Takeaways: Approval from shareholders through a special resolution is mandatory when a company seeks to increase its subscribed share capital, even if the proposal stems from a debt conversion agreement with an Asset Reconstruction Company (ARC). The Court upheld that the Bombay Stock Exchange (BSE) rightly rejected the listing application due to the absence of such shareholder approval. This decision reaffirms compliance with SEBI Regulations and strengthens corporate governance norms in India. The judgment reinforces that companies cannot bypass shareholder approval under Section 62 when increasing share capital. Legal and financial professionals, particularly those handling SARFAESI Act and SEBI compliance, should take note of this clarity. For Full Insights: Legal professionals and stakeholders are encouraged to study the judgment carefully, especially regarding: 1️⃣ The Companies Act, 2013 provisions on share capital. 2️⃣ SARFAESI Act implications on debt-to-equity conversions. 3️⃣ Compliance with SEBI (LODR) Regulations, 2015. This judgment brings much-needed clarity for businesses, investors, and stock exchanges, setting a precedent for similar corporate disputes. #CorporateLaw #SEBIRegulations #SupremeCourtJudgment #CompanyCompliance #LegalInsights #DebtConversion #SARFAESIAct #ShareCapital #Governance #LegalProfessionals #StockExchange #BSE #CompaniesAct2013 #LawUpdates

Brief details: Appeal at Apex court The appellant-Jyoti Limited applied for listing of certain equity shares to the Bombay Stock Exchange whihc was declined stating "appellant had not taken in principle approval from the Stock Exchange and that the appellant had not even taken the approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited" The above order of the BSE rejecting the application of the appellant for the listing of shares was upheld and confirmed by the Securities Appellate Tribunal Grounds; Section 9(1) of SARFEASI Act 2002, permits RARE to take measures such as conversion of any portion of debt into shares of the borrower company. The appellant company had not proposed to increase the subscribed capital rather it is RARE that has done it, no approval of shareholders is necessary. Facts: Here it is evident that the appellant company had entered into discussion with RARE and it was agreed upon between the parties to convert part of its outstanding debts of Rs.32.80 Crore into equity shares.Resolution passed by BOD was not endorsed by shareholders of the company.application to lsit the shares was by Appellant Company and not by RARE. Accordingly, as contemplated by Section 62(1)(c) of the Companies Act, 2013, the approval of the shareholders would be mandatory before the shares are accepted for listing on the BSE. Finding of SAT that the approval of the BSE is necessary in view of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is clear and we do not have a different opinion. Special resolution of the shareholders is necessary which is lacking in the instant case. This statutory appeal under Section 22 F of Securities Contracts (Regulation) Act, 1956 is devoid of merit and is dismissed.

𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫 𝐀𝐩𝐩𝐫𝐨𝐯𝐚𝐥 𝐢𝐬 𝐍𝐨𝐧-𝐍𝐞𝐠𝐨𝐭𝐢𝐚𝐛𝐥𝐞: 𝐒𝐮𝐩𝐫𝐞𝐦𝐞 𝐂𝐨𝐮𝐫𝐭 𝐉𝐮𝐝𝐠𝐦𝐞𝐧𝐭 𝐢𝐧 𝐉𝐲𝐨𝐭𝐢 𝐋𝐢𝐦𝐢𝐭𝐞𝐝 𝐯𝐬. 𝐁𝐒𝐄   The Supreme Court of India, in 𝘑𝘺𝘰𝘵𝘪 𝘓𝘪𝘮𝘪𝘵𝘦𝘥 𝘷. 𝘉𝘚𝘌 & 𝘈𝘯𝘳. (Civil Appeal No. 4707 of 2022), recently upheld the rejection of Jyoti Limited’s listing of equity shares on the Bombay Stock Exchange (BSEIndia) due to the absence of shareholder approval and compliance with regulatory norms.    𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝: Jyoti Limited had an agreement with an Asset Reconstruction Company (ARC), RARE, to convert ₹32.80 crores of its outstanding debt into equity shares. Following a resolution passed by its Board of Directors on 02.05.2018, the company applied to BSE for listing 59,63,636 shares allotted to RARE. The BSE rejected the listing application due to the lack of shareholder approval and prior in-principle approval from the exchange. The Securities Appellate Tribunal upheld this decision.   𝐒𝐮𝐩𝐫𝐞𝐦𝐞 𝐂𝐨𝐮𝐫𝐭’𝐬 𝐎𝐛𝐬𝐞𝐫𝐯𝐚𝐭𝐢𝐨𝐧𝐬: Shareholder approval via a special resolution as prescribed under section 62 (1) (c) of the Companies Act, 2013 is mandatory for increasing subscribed share capital, even in cases of debt-to-equity conversion under SARFAESI. Regulation 28 of SEBI’s Listing Obligations mandates prior in-principle approval from stock exchanges for listing new shares—a requirement that was not met in this case.   𝐊𝐞𝐲 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲𝐬 - 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫 𝐀𝐩𝐩𝐫𝐨𝐯𝐚𝐥 𝐈𝐬 𝐂𝐫𝐮𝐜𝐢𝐚𝐥: Section 62(1)(c) of the Companies Act underscores the necessity of shareholder consent, ensuring compliance with statutory corporate governance norms. 𝐒𝐄𝐁𝐈 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐈𝐬 𝐌𝐚𝐧𝐝𝐚𝐭𝐨𝐫𝐲: Regulatory requirements such as prior in-principle approval cannot be bypassed, reinforcing the need for procedural diligence in equity listings. This landmark judgment serves as a strong reminder that compliance with corporate and securities laws remains non-negotiable.   Access the full judgment for detailed insights. #SupremeCourt #CorporateLaw #SEBI #SARFAESI #CompaniesAct #DebtRestructuring #LegalUpdate #Governance

New Horizons in Market Regulation: CJI Chandrachud’s Inaugural Address at SAT In a landmark event, Chief Justice of India D.Y. Chandrachud inaugurated the new premises of the Securities Appellate Tribunal in Mumbai. His address highlighted the critical surge in equity markets and the consequent need for judicial vigilance. Stable Backbone: He emphasized the importance of a stable judicial backbone to keep up with the increasing market transactions and evolving regulations. Expansion Call: He advocated for the establishment of additional SAT benches to manage the growing workload effectively. Regulatory Caution: The CJI advised SEBI and SAT to proceed with caution during these times of significant market activity. This move signals a proactive approach towards ensuring that our market regulation mechanisms are robust and responsive. Read more here: https://lnkd.in/gUJFcbMb #MarketRegulation #JudicialReform #SEBI #SAT #EquityMarkets

Company Law Hon'ble Supreme Court Of India in the case of Jyoti Limited vs BSE Limited and another Case no- Civil Appellate Jurisdiction Civil Appeal no. 4707 of 2022 Date of Decision -10.12.2024 Recently ruled that, without in-principle approval from the company's shareholders, debt-to-equity converted shares issued in favor of any person cannot be listed on the stock market. In other words, the Court stated that obtaining in-principle approval from the company's shareholders, as required under Section 62(1)(c) of the Companies Act, 2013, is mandatory before allotting shares to any person. Without this approval, the allotted shares cannot be listed on the stock market. Moreover, the Court stated that even if the company's shareholder approves the allotment of the company's share to a person, the shares would not automatically become eligible for listing unless the listing is approved by the recognized stock exchange as per Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. #shareholder #approval #listing #stockexchange

Our Senior Partner, Hardeep Sachdeva, Partner, Sudish Sharma, Partner, Sumit Mangal and Senior Associate, Druheen Mohanty share their thoughts on the recent proposed amendments to the rights issue process by Securities and Exchange Board of India. Please read their article on our website at https://lnkd.in/dQtp_vPt #SEBI #rightsissue #proposedamendments #securitieslaw AZB & Partners

What Laws Govern the Stock Markets? Read the latest article on LCI! https://lnkd.in/gPpFkVE5 GET Expert Drafts on Various Legal Documents from Civil Courts to the Apex Court

📰 Supreme Court Ruling: A Milestone in Corporate GovernanceIn a landmark judgment, the Supreme Court of India has reinforced the critical role of shareholder approval in listing debt-to-equity converted shares on stock exchanges. Our latest blog dives deep into the Jyoti Ltd. v. BSE Ltd. & Anr. case, exploring how this decision intertwines corporate governance, regulatory compliance, and financial restructuring.  Today's blog unpacks the Court’s emphasis on shareholder rights and regulatory adherence and the implications for companies navigating debt restructuring and compliance with the Companies Act, 2013, and SEBI regulations. #SEBIRules #ShareholderRights #SupremeCourtJudgment #BlogUpdate Read the full analysis here: https://lnkd.in/gN-xETXv

🔍 Know Your Rights as a Shareholder in India 🔍 As a shareholder, your investment comes with rights that protect and empower you. Here’s a quick breakdown of key rights that can make a difference in your journey with BSE Limited or any other company.👇 1️⃣ Receive Key Documents: Get copies of Audited Financial Statements, AGM Notices, and Annual Reports. 2️⃣ Access to Company’s Constitution: View the Memorandum and Articles of Association anytime. Link here ➡️ 3️⃣ Active Participation & Voting: Participate in Annual General Meetings, vote, appoint a proxy, and demand a poll if needed. 💼 4️⃣ Right to Transfer Shares: Challenge refusals to transfer shares. 5️⃣ Call for AGM: Apply to NCLT if the AGM isn't held. 6️⃣ Appoint & Remove Directors: Take control in appointing or removing company directors. 📜 7️⃣ Inspection Rights: Inspect minute-books and statutory registers during business hours. 8️⃣ Dividend Entitlement: Receive dividends as declared by the company. 💰 9️⃣ Appoint Auditors: Exercise your right to appoint statutory auditors. 🔟 Preemptive Rights: Get preference over outsiders in new share issues. 1️⃣1️⃣ Engage with the Board: Ask questions, propose items on the agenda, and propose resolutions at AGMs. 1️⃣2️⃣ Protection from Mismanagement: Seek action against oppression and mismanagement by reaching out to the NCLT. 💬 Stay informed, stay empowered. Knowing your rights is the first step to making the most of your investment! #ShareholderRights #InvestorAwareness #BSE #CapitalMarkets #ShareholderProtection #InvestSmart

In the latest edition of our monthly newsletter, 'Recent developments in India's corporate & commercial laws - December 2024', we analyse the following topics: 1. SEBI’s delisting protections not applicable for delisting under IBC | Bombay High Court upholds validity of Regulation 3(2)(b)(i) of Delisting Regulations   2. Stamp duty not applicable on mergers of wholly-owned subsidiaries | Delhi High Court resolves ambiguity on central government’s exemption notification for NCT of Delhi   3. Overhaul of the angel fund regulations | SEBI’s consultation paper on review of regulatory framework for angel funds in AIF Regulations 4. Performance Bank Guarantee must remain valid until the complete implementation of the resolution plan | Supreme Court suggests steps for streamlining the insolvency process   5. Changes to the equity index derivatives framework | SEBI’s Circular to increase investor protection and market stability in equity index derivatives 6. Creditor-led insolvency to be implemented soon | IBBI to implement ‘debtor-in-control’ model insolvency framework   7. Key changes to streamline compounding under FEMA | Foreign Exchange (Compounding Proceedings) Rules, 2024    8. Full refund of advance money in absence of forfeiture clause | Telangana RERA imposes penalty for contravening Section 13 of RERA   9. RBI simplifies forex regulations for start-ups | Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fourth Amendment) Regulations, 2024 10. Integrating accountability standards for AI-use in financial markets | SEBI’s consultation paper on assigning responsibility for use of AI-tools by market entities regulated by SEBI Fox & Mandal contributors included (Arindam Sarkar, Ashutosh Gupta, Anwesha Sinha, Rudresh Mandal, Abhinav Jain, Akshay Luthra, Ayushi Awasthi, Biprojeet Talapatra, Rangita Chowdhury, Suyash Sharma, Tanika Rampal) The newsletter is published on Mondaq as well and can be accessed using this link: https://bitly.cx/jDJW #FoxandMandal #legalupdate #newsletter #corporatelaw #legalnews #mergersandacqusition #IndianBusinessLaw #CorporateCompliance #LegalDevelopments #mondaq